Wi-MAX: A Viable Alternative to DSL or Cable?

Wi-MAX is the sister technology to Wi-Fi, but it has wider area coverage. It's already up and running in such major cities as San Francisco, Chicago, and New York. Is it an option for small and midsize businesses?

NewsCast, a British photojournalism company that specializes in photography syndication and online image libraries, has one less headache to worry about in its Manhattan bureau. Uploading and downloading images, a task that requires a lot of extra bandwidth due to the size of the files, has become a lot easier over the last year since the company switched to Wi-MAX to connect to the Internet.

Wi-MAX -- a loose acronym for Worldwide Interoperability for Microwave Access -- is a telecommunications industry standard that can provide wireless connectivity over long distances. A related technology, Wi-Fi operates within a much smaller range. The standard is roughly divided into two solutions; Mobile Wi-MAX and fixed Wi-MAX. NewsCast uses fixed Wi-MAX as its broadband provider.

“It’s the greatest thing since the invention of white bread,” says Jim Sulley, NewsCast’s director of photography. Before, NewsCast had a T-1 line that cost $800 a month for 1.5 megabits per second (Mbps) of bandwidth and the service was riddled with technical difficulties disrupting the flow of business.

“It was that last mile that was killing us. There were so many problems with the T-1 line. I couldn’t be happier with WiMAX,” Sulley says. “It’s much more reliable. It’s faster. And the cost is much lower. We’re on the ‘Five for Five’ plan. We get up to 5 mbps for $500 a month.” Sulley says his business often needs that extra burst of bandwidth due to the nature of what they do; they move large numbers of image files online.

Does it sound too good to be true? If your business is located in one of the major metropolitan areas in the country where fixed Wi-MAX is available (New York City, Chicago, and San Francisco, to name a few), then this technology can be a viable alternative to other forms of Internet service, such as DSL, Cable, or T-1 lines. Otherwise, you may have to wait.

Wi-MAX: sooner or later

“Wi-MAX is extremely limited in the United States right now and that’s not likely to change anytime soon. It may have some effect by 2010. Mainly it will compete against that last mile of DSL and Cable typically in suburbia where they still aren’t fully rolled out,” says William Clark, a research vice president from Gartner.

Mark Tauschek, a senior research analyst from Info-Tech, a research firm based in Ontario, Canada, is more optimistic. He agrees the real rollout won’t happen until 2010, but does believe 2008 will be a big year for Wi-MAX.

“There are a few things coming together this year that are going to make Wi-MAX ubiquitous,” says Tauschek, who points out the following:

Sprint is committed to Wi-MAX.Sprint has already committed itself to the 2.5 GHz spectrum with the FCC, with the understanding it would be used for WiMAX. So despite recent headlines of Sprint’s delayed deal with Clearwire (the other company heavily committed to creating a nationwide Wi-MAX network in the United States), upheavals in upper management, reports of expected layoffs and even the possibility of moving its corporate headquarters back to Kansas from Virginia; don’t count out Sprint’s long term commitment to Wi-MAX.

Industry support for Wi-MAX. By mid-year, laptops will be shipping out with Intel chip sets that support Wi-MAX.

Competitive pricing. It’s an industry standard, which means no royalties. “It also makes it very cookie cutter to stamp out in volume. Prices will drop fast,” points out Tauschek. From Sulley’s story, it’s clear it’s already beating out T-1 lines handily in pricing.

A technology that’s worth the wait

According to Maravedas, a telecom research company based in Montreal, Canada, there are some 500,000 Wi-MAX users in the United States right now. Maravedas predicts that number will grow to 10 million by 2013. Those figures exclude the Sprint deal, which if it goes through would mean a coast-to-coast Wi-MAX network available to 100 million users.

In addition to competitive pricing, here are some other possible advantages to using Wi-MAX as a fixed broadband provider.

Covering the last mile -- and 69 other miles. Wi-MAX carries at a range as far as 70 miles. Critics complain the signal weakens the farther out it goes and is really optimal up to about 10 miles. Even so, as a broadband solution it would be advantageous for businesses divided among several floors in one building, across a corporate park of buildings, or connecting employees who live in relative close proximity to the office.

Here, there and everywhere worldwide.Wi-MAX has already hit critical mass in some countries and is quickly gaining steam in others. Eighty percent of Canadians have access to Wi-MAX now. Gartner predicts there will 48 million Wi-MAX connections globally by 2010. For the overseas business traveler, a universal standard across borders for connectivity could make life a lot easier on the road.

Positive response where deployed.Sulley’s story about his experience switching to Wi-MAX is just one man’s opinion. But here are some numbers that indicate he’s not alone in his satisfaction with his new broadband choice. Clearwire serves the town of Kirkland, Wash., a suburb of Seattle and only a couple of miles from Microsoft’s Redmond, Wash. corporate headquarters. It has picked up no less than 90,000 subscribers in just the past six months.

Drawbacks to Wi-MAX

Clearly the biggest drawback to Wi-MAX right now is availability. But there are others to consider:

If it isn’t broken, don’t fix it.Very few businesses are without a broadband option. For the most part DSL and cable lines have been dropped down to the last mile. The telecommunications and cable companies aren’t going to walk away from years of investment deploying that infrastructure. Since it’s already in place, that means adding a new user is virtually free for them and pure profit off the customer. Traditional broadband providers can afford to get in a pricing war when the time comes.

Security. Since penetration is still low, it remains to be seen just how easy or difficult it will be for hackers to target Wi-MAX networks. Industry watchers see potential vulnerabilities in the standards making it possible for “man-in-the-middle” attacks, denial of service attacks, as well as weaknesses in encryption that could contribute to data leaks.

Other emerging options.The first option that comes to mind would be a fiber optic network (FiOS). Because it involves rolling out that last mile of fiber building by building, deployment is slow. But a “lit building” is highly coveted office space. The fiber optics lines are already wired into the building and very user friendly for tenants, who receive lightening fast, reliable connectivity. Verizon is heavily pushing FIOS.

Despite those obstacles, “I’m bullish on Wi-MAX,” says Tauschek. One thing he may not be taking into account is the bears: the ones plaguing Wall Street these days. A slow down in the economy could easily turn that last mile into the long mile for any new broadband provider trying to break into that market.